Most families who obtain immense wealth squander it by the third generation. But Chris Davis comes from a family whose grandfather and father all became independently wealthy of each other, and Davis has done the same. How does that keep happening? In this conversation, we find out.
Shane and Chris discuss life and investment lessons he learned from his father and grandfather, why writing is more important to clarify one’s thinking no matter who’s reading it, and the surprising benefit of reading physical newspapers and wearing ties to work. Davis also shares his value-investing philosophy, what he learned from working with and meeting Charlie Munger, and what parents can do to not raise entitled kids. Davis talks about his alcohol drink tracker and why it’s important to him, why he never puts himself in situations where envy can grow, and Warren Buffett’s letter about why investment managers underperform.
Available now: YouTube | Apple Podcasts | Spotify | Transcript
Chris Davis is on the board of Berkshire Hathaway and The Coca-Cola Company. Davis is Chairman of Davis Selected Advisers-NY, Inc., an independent investment management firm founded in 1969. Davis joined Davis Selected Advisers-NY, Inc. in 1989 as a financial analyst, and in 1995, he became a portfolio manager of the firm’s flagship funds.
Here are a few highlights from the episode:
The writing is not about the product for the client; it’s about what you learn by writing for yourself.
If you really think the goal of work is to invest as little as you can in order to get as much payment as you can, of course it’s going to suck. And of course everybody’s going to cheat and you’re not going to have friendships and you’re not going to learn anything.
What I loved about reading a newspaper is that I wasn’t always sure where my eye was going to go, what I was going to focus on. And it was often the case that something might have caught my eye in a way that it doesn’t when I’m scrolling on this tiny little screen
Interest rates are really about you using a productive asset that belongs to somebody else and therefore needing to compensate them for the loss of that. So of course, for all of human history, money has a cost.
There’s one thing on earth I love. I love a sauna, and so I only give myself a sauna after I work out. There’s no other way I can get a sauna. And so it’s amazing how effective that is in manipulating myself into doing something I don’t really feel like doing, which is going and exercising.
The most dangerous thing in the world with a 12-year-old is to try to be his friend. But the worst thing with a 40-year-old is to try to be their parent.
I love what Hemingway said: it’s not finishing the bottle that gets you in trouble; it’s opening another one.
Timestamps:
00:00 – Intro
00:20 – Lessons Davis learned from his father and grandfather
22:34 – The importance of writing things no one reads
33:05 – Davis’ experiences through financial crises
48:41 – Why Davis loves managing a mutual fund
51:59 – Why Berkshire Hathaway operates with margin
57:15 – What is risk?
01:00:12 – On low-interest rates and their future impact
01:10:56 – The mismatched timelines between CEOs, companies, investors, and policy
01:18:29 – How Davis and Munger met
01:26:30 – Lessons learned from Munger
01:37:39 – Why avoiding weaknesses is the ultimate recipe for success
01:51:56 – How to raise non-entitled kids and avoid lifestyle creep
01:12:20 – On Happiness
02:23:10 – Good vs. bad board meetings
02:27:44 – Three generations of wealth
02:33:25 – On success
The 1965 Letter from Buffett
